Code Blue: Reviving Canada's Health Care System by David Gratzer, MD

Long the shining beacon for the American Left, the grand example of successful socialism on North American soil, the Canadian health care system is falling apart, or so says David Gratzer in Code Blue: Revising Canada's Health Care System.

Dr. Gratzer is a journalist and recent graduate of the University of Manitoba's medical school. Canada's system, known as "Medicare," is run by provincial governments and paid for by a combination of provincial and national funds. Co-payments are not allowed, nor are people allowed to go outside the system and pay for services directly (unless one leaves the country). The system is plagued, Gratzer writes, by long waiting lists of sick patients, overcrowded hospitals, second-rate equipment, and a stream of doctors, nurses and patients fleeing to the United States. He documents these woes not only with a host of health care horror stories from Canadian newspapers, but with a long list of studies, both official and private.

Gratzer says, "Waiting lists are the biggest concern that Canadians have with their health care system. The lists are not a medical but an economic problem. Because patients have no incentive to think twice about using health care services, policy makers are forced to find ways to ration health care."

Gratzer agrees that the Canadian system is less costly than the American one, but says the difference is overstated in a number of ways. Total American spending is inflated, and Canadian spending lowered, by the Canadians who cross the border to receive services in the States. He also points out that raw comparisons don't account for differences in spending on research, or differences in demographics or accounting procedures. He notes that, "Canada's entire research budget is smaller than the R&D budget of the University of Texas, M.D. Anderson Cancer Center."

Even after adjusting for these differences, Canadian medicine may still be cheaper, but you fail to get what you fail to pay for --- in this case, modern equipment, adequate facilities, and motivated physicians.

Gratzer's most withering analysis is aimed at Canada's "gutless" political establishment that relies on bromides and clichés in place of serious efforts to address the problems in Canadian medicine: "The badly needed national debate isn't taking place. There is only the sound of silence as partisans of every political stripe advocate the intellectually vacant position of maintaining the status quo in an ideal system that doesn't really exist."

He maintains that the early success of medicare --- back when the population was young and costs were low --- became hard-wired in the Canadian psyche as a source of national pride. Now that the system is failing, no political leader wants to be the first to tell the truth. As with "The Emperor's New Clothes," denial reigns supreme.

Gratzer doesn't stop at documenting the problems in Canadian medicine, nor at laying the responsibility at a political class that prefers to look the other way. He also examines possible solutions and their consequences, including simply spending more money, applying user fees, or creating a parallel privatized system to supplement the public program. Any of these reforms would be an improvement, he says, but "the most important step toward renewing health care in [Canada] is to accept that medicare is fundamentally flawed." He notes that medicare currently "consumes 21 cents of every dollar earned by working Canadians," and the Office of the Superintendent of Financial Services projects a tax rate of 94.5 percent will be needed to support the program in 2040 without fundamental reform.

Instead, Dr. Gratzer would like to see patients making their own decisions about how to best spend their health care resources, whether those resources come through the government, from employers, or directly out-of-pocket. And the best way to do this, he proposes, is through a national system of medical savings accounts (MSAs), combined with high-deductible indemnity insurance plans. He examines several alternative MSA designs, including the possibility of government-provided high deductible insurance and taxpayer funded "allowances" for MSA deposits. He prefers self-funded MSAs using tax-free deposits. He argues that the poor and persons with "special needs" could be granted extra assistance.

He concludes that "medical savings accounts aren't a miracle solution. But an MSA system has the potential to address many of the problems with the present health care system in Canada." They could fix the problems of waiting lists, second-rate equipment and fleeing physicians, while maintaining accessibility and timeliness of care.

Reviewed by Greg Scandlen Frederick, MD

Mr. Scandlen is a senior fellow in health policy at the National Center for Policy Analysis in Dallas, Texas. His e-mail is GMScan@aol.com.